Fractional Owners Club


The timeshare industry (for the last 30 years) have proclaimed the industry is growing, that sales are buoyant, and all is well. The reality is, sales have stagnated and in very recent times plummeted. The claimed new sales flow from sales of timeshare to an existing and ever dwindling customer base. The present consumer base has been sold more and more timeshare, have faced off more and more sales people in arduous sales presentations. The consequences are that timeshare sale desks are struggling, and a new product was required and came in the form of the Fractional Owners Club product.

Parenthetically In the pre-2010 regulation debate, the European Union demanded that timeshare owners who bought into and joined “holiday clubs” could leave the club at any time and without giving an excuse.

Knowing the mind of regulators and the dissenting timeshare advisors, the previously claimed holiday clubs were re termed as timeshares. Re framing the product in this way excluded 100,000’s of people who bought points contracts from the right to terminate. Leaving the unanswered question, what is a timeshare points contract a timeshare or a long-term holiday product?

The EU regulators were minded to leave the question open, therefore the product did not enter a contentious debate and consequently as soon as the regulations came into force, they became ineffective thus avoided.

To ensure that the industry did pander to the pressure to provide an exit from the very binding timeshare contracts and in true timeshare style, the industry morphed what was another exceptional concept “fractional holiday ownership”.

Fractional holiday ownership was in part an investment process and has been sold by many and to holidaying consumers all over the world. The simplistic nature of the model is that 12 people buy a single holiday property, manage it themselves and the holiday weeks are allocated and rotated so each gets to holiday in every week available in the 12-year cycle. Other models might be 8, 4 or 2 owners and each owner can exchange with the others if they both agree.

Then the timeshare industry got hold of the idea, some perverted and morphed it into an “exit policy”.

In short and having regard for the fact that each product is slightly different -

The consumer acquired a fixed timeshare right to occupy (some think that right is registered). When acquired it handed it to a trust company to look after, who has previously agreed to allow the seller-connected entity to fully control the timeshare for a period of 15 years. After that period has expired the timeshare will be sold and if all the members agree the sale funds will be distributed amongst the fractional owners.

Accordingly, you are acquiring an interest in a property and immediately give it away and for someone else to look after manager and maintain. You’re required to use it and pay the annual fees dissected by the manager for which you have no control over. After 15 years and if all members agree the property will be sold. In the alternative if all members don’t agree, it won’t be sold and the burden will continue. Noteworthy is, the connected entity (who sold it to you) is a member and may not agree to sell it and keep you bound to the obligations after 15 years.

Faced with this reality, dwindling timeshare sales, close department and adverse rulings, many in the timeshare industry are closing sales desks. The consequences are that many sales people who know the product, the consumers and what they were told, are leaving the world of timeshare and setting out either alternative products or claiming to be a new breed of lawyers, capable of delivering terminations of the contracts and compensations claims. The stark reality is, that all armed with cold calling lists they will persistently call you to offer termination services in such a way that the compensation will flounder due to either affirmation rules or equitable termination concepts.

Therefore needy timeshare advice is required and at all stages.